Stock market indices can be described as baskets of shares. They are calculated based upon the average prices of a number of shares selected from a market or a particular sector. Their performance allows the investor to know the evolution and trends in the market. At the same time, indices serve as a reference for investors who specialize in funds or portfolios of shares. Following is a list of the principal stock indices on the world market.
- Eurostoxx 50: A pan European index composed of shares of companies in different countries on the continent. Unlike national indices, which are centered on a single country, the Eurostoxx index contains the 50 largest traded companies in the Eurozone. Not all of them have the same importance within the index (the company with the greatest weighting can have only 10%) since they are weighted according to market capitalization, defined as the number of shares multiplied by the share price at any given moment. Eurostoxx has a base value of 1,000 points, set in 1991.
- Stoxx 600: Another of the most important paneuropean indices. Its members are the 600 European companies with the largest market capitalization. Eighteen countries are in Stoxx 600: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Holland, Iceland, Ireland, Italy, Luxembourg, Holland, Norway, Portugal, Spain, Switzerland, Sweden and the United Kingdom. Coca-Cola, Allianz and Telecom Italia are some of the companies that comprise it. The Stoxx 600 has a base value, established in 1998, of 279 points.
- Stoxx Banks: A pan European index dedicated exclusively to banks, which currently has 42 members. Spain, Italy, Austria, Norway, France and Sweden are the countries with the most banks on this index.
- IBEX 35: The benchmark Spanish index, the IBEX measures the share prices of the country’s 35 largest companies by market capitalization. Those with the largest market cap (for example, BBVA) have the most weight in the index, so their ups and downs have the greatest influence on the IBEX’ performance. The Ibex 35 has a base value of 3,000 points, established in 1989. Every six months, a committee decides which companies will enter or leave the index, depending on various factors, such as liquidity, prices, capitalization or number of shares.
- FTSE 100: The Financial Times Stock Exchange is the British stock index, comprised of the 100 principal companies traded on the London Stock Exchange, which represent 70% of the U.K. market. Just as in the IBEX 35, the FTSE’s members are weighted according to market capitalization. As the name indicates, the index is published in the Financial Times newspaper. The FTSE was developed in 1984, starting with a base value of 1,000 points. Barclays, EasyJet and Burberry are some of the 100 companies on the FTSE100..
- DAX: Originally called the Deutscher Aktienindex, the DAX is the benchmark index of the Frankfort Stock Exchange. It is composed of 30 companies that are weighted according to their market cap. Among its most prominent members are Deutsche Bank, Adidas and BMW. The DAX’s base value was established in 1987 at 1,000 points.
- CAC 40: Cotation Assistée en Continu, the stock index of France, began in 1987 with a base value of 1,000 points. The CAC 40 is a weighted average of the 40 most important companies among the 100 principal companies that trade on the Paris Bourse, among them L’Oreal, AXA and Danone.
- S&P 500: The Standard & Poor’s 500 is one of the most important indices in the United States and is regarded as a reference for the entire U.S. market. It is composed of the 500 companies with the largest market cap on U.S. stock exchanges.
- Nasdaq: A stock index composed of companies that trade on the New York Stock Exchange. The index contains 100 companies, most of them dedicated to technology and innovation, such as Facebook, PayPal and Netflix.
- Nikkei: The stock index of the financial markets of Japan, it is composed of 225 companies that trade on the Tokyo Stock Exchange. As with the FTSE in England, the Nikkei is published in one of the most popular daily newspapers and the index is named in its honor: the Nihon Keizai Shinbun, or Japanese business daily. The Nikkei’s base value has been 100 points since 1949. Unlike other indices, the Nikkei doesn’t choose its member companies based on market capitalization, but on liquidity, as is the case with Casio, Kawasaki and Nippon.
- HSI: The Hang Seng Index, the stock index of Hong Kong consists of 33 members that represent more than half of the Hong Kong stock exchange. Membership is based on market capitalization. Tencent Holdings Limited, CLP Holdings Limited and The Bank of East Asia are some of the HIS’s largest companies.
- SHCOMP: The principal stock index of China, SHCOMP is composed of the most powerful companies on the Shanghai Stock Exchange. Its base value, established in 1990, is 1,000 points. Air China, Orient Group and Shanghai Oriental Pearl are three of the companies that form part of the SHCOMP.
- Nifty: The stock index of India, it contains half the companies on the country’s National Stock Exchange. The Nifty is composed of 50 companies that are chosen according to their weighting of their industries in the market. That is, if the agricultural sector has a 5% weighting in the National Stock Exchange, it will have a 5% representation on the Nifty.
- TWSE: Also known as the TSEC, it is the stock index of the Taiwan Stock Exchange. TWSE’s base value, which dates from 1996, is 100 points. Acer, Biostar and HTC are some of its best-known member companies.